SEC urged to create single site for broker, adviser background checks

The Securities and Exchange Commission is being pushed to create a single database for investors to conduct background checks on financial professionals.

WASHINGTON (MarketWatch) — A panel advising the Securities and Exchange Commission is pushing for a single database to conduct background checks of both investment advisers and brokers as a way to cut down on fraud targeting the elderly.

Currently, there are two databases, one for investment advisers, maintained by the SEC, and another for brokers, maintained by the Financial Industry Regulatory Authority. Other financial professionals including municipal advisers and their employees, commodities brokers, insurance agents and mortgage brokers aren't captured in these databases.

The Investment Advisory Committee called on the SEC to develop a disciplinary database for investors to easily conduct searches. The committee, which has members from academia, the industry, and various advocacy group, also said the SEC should try to get other regulators to pool all relevant databases into a single site on financial professionals.

The committee, in a background document laying out the recommendation, said the move would in particular empower elders to fight fraud.

“Elders wishing to conduct a background check on a market professional... confront a diffuse, confusing, and complex environment,” the report says.

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